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Automated Margin Lending: A Possibility for Passive Income with Cryptocurrencies

July 6th, 2018 at 6:17 pm UTC · 6 min read

Augmenting your own coins without investing additional capital; what sounds strange at first glance turns out to be logic at the second glance.

At several large crypto exchanges like, or you can, besides the actual acquisition of various cryptocurrencies, lend your coins at these exchanges to margin traders. They use your coins for leverage transactions that need additional capital for that to maximize their (potential) profits.

For this capital provision, the so called margin lending, you will receive interest because this is a short-term loan. The interest rate is more than impressive. The average interest rate for the lending of, for example, Bitcoins on is around 20% during the last 12 months.

Because the duration of loans are usually two days a significant interest rate is achieved particularly with regard to the compound interest effect.

How does the Lending Work, and what Role does Play?

If you already have an account at, for example, Bitfinex you can start immediately with the margin lending. You have to transfer your coins to the funding wallet of Bitfinex which happens without time delay or any costs.

Than you can offer your coins to margin traders at the exchange by specifying amount, duration and requested interest rate. As soon as a trader accepts your offer the coins are “locked in” for the duration of the leverage transaction.

Don’t be worried, the trader can neither sell nor remove your coins or use them for other things. He can use them only for his leverage transactions.

Furthermore, the trader has to deposit a security at the exchange. If his security is not enough because for example his leverage transaction is going the wrong way the trade is automatically cancelled. You will get back your coins and the accrued interest is credited to you. The only risk is that the exchange is hacked. But that risk is present at every online wallet.

Aforementioned process of lending can be carried out at the homepage of the appropriate exchange. Here comes into play and tremendously simplifies the partially very tedious work.

Because the duration of the lending is usually two days as described above and could be terminated prematurely the coins are often unused in the wallet of the exchange and generate no interest if you don’t want to sit 24/7 in front of your PC monitoring everything. In addition the user interface of the exchanges is often very confusing and overloaded.

What does Coinlend Offer?

The service developed by Coinlend automates the lending according to your specifications. For this you have to open an account at Coinlend (email and password are sufficient, Facebook- and Google-login are possible, too) and to provide to Coinlend the API Key of the appropriate exchange.

There is no risk involved, the coins stay in the wallet of the exchange. The API Key allows the bot of Coinlend to place the lending order at the exchange according to your specifications.

At this point the developers of Coinlend has done excellent work as well. If your generated and entered API Key is not correct, for example it allows too many access rights, the software recognizes that and asks to enter a valid API Key.

Otherwise the bot will not start to work. This is exemplary and provides people without knowledge of every technical detail a great security aspect. In addition, the most important questions are answered on a clearly arranged FAQ page so you can quickly and easily orient yourself.

If your entries are correct and there are coins in your wallet at the exchange the bot of Coinlend begins its work immediately. You can enter your lending parameters comfortably at the site for example the minimum interest, duration or withheld reserve amount. For every active loan you can retrieve the exact information of the remaining duration and the probable interest.

After completion of the loan your coins will be credited to you again together with the interest and are lent again to the Coinlend bot. You can stop the lending at any time. In this case the bot does not generate any new loans until you activate it again.

Moreover Coinlend implemented a tax reporting system at the beginning of this year. Every user can now easily export and process his individual data for statistics or tax declaration – a great value for everyone.

Which Platforms and Coins are Supported?

Currently offers the possibility to automate margin lending at, and New trustworthy and reliable margin lending platforms will be added as soon as possible.

According to the coins tradeable at the corresponding platform Coinlend has no restriction: you can lend all common coins – starting from Bitcoins, Litecoins, Ether and even U.S. Dollar, Euro or JYen. In addition, new coins are implemented in a timely manner by Coinlend.

Summary and Future Prospects

Margin lending is a good opportunity to get more out of your Bitcoins and Altcoins. The interest rates are attractive and due to the short duration of the loans the compound interest effect is fully effective.

If you don’t shy away from a small risk you can achieve an attractive return especially regarding the interest rates that are currently offered for conventional investments.

If you should have a question the support will help you within very short time by mail or through Coinlend’s Facebook site, also they offer a moderated Telegram-group to exchange with other users.

In the next weeks, Coinlend will release a mobile app for iOS and Android, which will be a great added value for every user. With the app, you can easily adjust the settings or check the loans when you are on the road. Moreover the developers of Coinlend are testing the integration of the exchange, to give their users further application possibilities.

If you are using the free service of Coinlend your Bitcoins and Altcoins will multiply almost by themselves. Coinlend is recomended to everyone who is interested in margin lending or already active with it. The operation is easy, comfortable and the webpage offers a variety of statistics – and all that is totally free of costs.



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